Question

On Feb. 14, 2017 Rashmi sold good Rs 7,500 to Alka. Alka paid Rs 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On Apr.10, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept Rs 2,000 in cash and draw a new bill for the balance including interest Rs 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.

Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.

Answer 1

Books of Rashmi Journal
Date				Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2017
Feb.14	Alka				Dr.			7,500
			To Sales A/c						7,500
	(Goods sold to Alka)
Feb.14	Cash A/c				Dr.			500
	Bills Receivable A/c				Dr.			7,000
			To Alka						7,500
	(Cash received Rs 500 and the bill accepted by Alka)
Apr.10	Alka					Dr.		7,000
			To Bills Receivable A/c						7,000
	(Alka got the bill cancelled)
Apr.10	Cash A/c					Dr.		2,000
		To Alka							2,000
	(Received cash from Alka)
Apr.10	Alka					Dr.		500
			To Interest A/c						500
	(Interest charged on the amount due from Alka)
Apr.10	Bills Receivable A/c					Dr.		5,500
			To Alka						5,500
	(Alka's acceptance payable of two months received)
June 13	Cash A/c					Dr.		5,500
			To Bills Receivable A/c						5,500
	(Alka's acceptance met on due date)

Ledger Alka's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2017				2017
Feb.14	Sales		7,500	Feb.14	Cash		500
Apr.10	Bills Receivable		7,000	Feb.14	Bills Receivable		7,000
Apr.10	Interest		500	Apr.10	Cash		2,000
				Apr.10	Bills Receivable		5,500
			15,000				15,000

Books of Alka Journal
Date		Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2017
Feb.14	Purchases A/c		Dr.			7,500
		To Rashmi					7,500
	(Goods bought from Rahsmi)
Feb.14	Rashmi		Dr.			7,500
		To Cash A/c					500
		To Bills Payable A/c					7,000
	(Cash paid to Rashmi Rs 500 and a bill for Rs 7,000 drawn by Rashmi accepted)
Apr.10	Bills Payable A/c			Dr.		7,000
		To Rashmi					7,000
	(Bill cancelled before maturity)
Apr.10	Rashmi			Dr.		2,000
		To Cash A/c					2,000
	(Cash paid to Rashmi)
Apr.10	Interest A/c			Dr.		500
		To Rashmi					500
	(Interest due to Rashmi)
Apr.10	Rashmi			Dr.		5,500
		To Bills Payable A/c					5,500
	(Rashmi's acceptance payable after two months accepted)
June.13	Bills Payable A/c			Dr.		5,500
		To Cash A/c					5,500
	(The bill met on due date)

Ledger Rashmi’sAccount
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2017				2017
Feb.14	Cash		500	Feb.14	Purchases		7,500
Feb.14	Bills Payable		7,000	Apr.10	Bills Payable		7,000
Apr.10	Cash		2,000	Apr.10	Interest		500
Apr.10	Bills Payable		5,500
			15,000				15,000